Among the most challenging and complex issues faced by businesses, govern-ments, organizations and individuals are those that arise in the workplace—in the relationships between management and employee, worker and employer and between employer and the myriad of regulatory bodies which supervise a wide variety of activities that occur in the workplace.
In this booklet, we have endeavoured simply to identify many of the key issues of which employers and counsel for employers need to be cognisant and which need to be prudently managed.
The Canadian framework is, in some respects, similar to that of our neighbours to the south; but it is also unique and distinct from U.S. law in some very significant ways and a failure to appreciate those distinctions can prove costly and very damaging, both to an employer’s bottom line as well as to its corpo-rate culture. In this booklet we identify the statutory and regulatory framework for Canadian employment law, and we discuss the importance of employment agreements, the critical issue of termination of the employment contract, the human rights regimes and the duty to accommodate, the distinction between unionized and non-unionized workplaces, technology use and privacy rights in the workplace, the law of fiduciaries, mitigation, progressive discipline, some selected tax aspects of the employment relationship, the distinction between employees and independent contractors, bankruptcy and insolvency issues that arise in the employment context, employment issues that arise on the pur-chase and sale of a business and other topics of concern in employment law. This booklet is not intended to provide legal advice and does not purport to offer comprehensive treatment of any of the issues discussed herein. Instead, it is intended to identify for the reader the areas which require the attention of prudent management and vigilant counsel so that appropriate advice may be sought in connection with any of these issues as the need arises.
We hope that you will find this survey of the essential areas in Canadian em-ployment law to be of interest. We invite you to get in touch with any of the tal-ented, highly regarded and dedicated members of our employment law practice group with any questions and advice that you may have.
Working in Canada:
An Overview of Employment Law
Fall 2011
Page Overview of Canada’s Legal Framework for Employment Matters ... Employment Agreements ... Termination of the Employment Relationship ... Constructive Dismissal ... The Employee’s Duty to Mitigate: Working Notice and Re-Employment ... Temporary Layoffs in a Non-Unionized Setting ... Obligations of Departing Employees ... Progressive Discipline ... Human Rights Regimes in Canada and the Provinces ... The Duty to Accommodate – The Undue Hardship Threshold and the Workplace ... The Accessibility for Ontarians with Disabilities Act Customer Service Standard ... Workplace Violence and Harassment: Employer’s Duty to Protect Employees ... Pay Equity Primer ... Unionized Versus Non-Unionized Workplaces ... Technology Use and Privacy Rights ... Ex-Patriot Employees—Some Canadian Tax Issues ... Employment Law Issues Arising from Bankruptcy and Insolvency ... Employee or Independent Contractor—Canadian Factors and Advantages and Disadvantages ... Employment Aspects of Mergers and Acquisitions ...
TABLE OF CONTENTS
1 3 5 7 9 11 12 14 16 18 20 22 24 26 28 29 32 35 39Employment Law in Canada | 1 Canada has two primary sources of employment law: (1) statute
and (2) the common law.
Employment statutes in Canada are enacted by both the federal parliament and the provincial legislatures because of individual and shared constitutional jurisdiction over employment matters. As a result, both levels of government have enacted an employ-ment law statutory framework that standardizes the core aspects of the employee–employer relationship, including minimum wages, health and safety in the workplace, anti-discrimination, and pay equity. Many statutory standards reflect, or are in compliance with, International Labour Organization conventions, several of which Canada has ratified. This statutory framework establishes both minimum standards below which an employer can never fall and minimum rights for employees that cannot be contracted out of, with the result that there is no employment “at will” in Canada.
The statutory framework exists under a broader common law framework which is briefly discussed below. Generally, common law contractual principles must give way to or are adapted to the statutes, creating a hybrid legal view of employment. This article focuses on the employment law statutory framework at both the federal level and within the province of Ontario.
DIVISION OF CONSTITUTIONAL JURISDICTION OVER EMPLOYMENT MATTERS IN CANADA
Like the United States, Canada is a federation; it is comprised of ten provinces and three territories, joined by a written constitu-tion, the Constitution Act, 1867.1 The constitution sets out the
specific legislative jurisdiction of both the provinces and the federal parliament.
Both the federal parliament and the provincial legislatures have the jurisdiction to enact labour and employment laws. Provincial authority over employment matters is derived from the prov-inces’ broad constitutional jurisdiction to regulate “property and civil rights”, as the right to enter into contracts is viewed as a civil right. Generally, federal authority for employment matters is limited to the federally-regulated industries expressly listed within the constitution (or modern industries that have been judicially
assigned), such as banking, radio and television broadcasting, air transportation, interprovincial trucking and shipping, and railways.
Because the federal parliament has jurisdiction over a minority of Canadian employees, a solid grasp of provincial employment legislation, which governs approximately 90% of all employees in Canada, is extremely important when dealing with employ-ment matters. In addition, while employemploy-ment statutes in each province are similar, they nevertheless contain subtle distinctions and should be consulted individually if an employment matter arises in a particular province.
FEDERAL EMPLOYMENT LEGISLATION
The primary employment legislation governing federally-regulated industries is the Canada Labour Code2. This statute governs,
among other things, labour or industrial relations (including collective bargaining), occupational health and safety, hours of work, minimum wages, vacation entitlements, holidays, sanc-tioned absence, terminations, severance, and unjust dismissal. The Canadian Human Rights Act3protects employees and
potential employees (i.e. candidates) from discrimination based on race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability, and convictions for which a pardon has been granted. The Act further establishes the Canadian Human Rights Tribunal which has broad remedial powers, including the power to reinstate employees who are terminated, as well as the power to award modest financial compensation for injury to feelings, dignity and self-respect.
The Canada Pension Plan Act4 and the Employment Insurance
Act5 are federal Acts that govern all employers. The Canada
Pension Plan Act provides individuals who qualify with pension benefits upon retirement or permanent disability. The Employ-ment Insurance Act provides replacement income to individuals during temporary periods of unemployment.
PROVINCIAL EMPLOYMENT LEGISLATION (ONTARIO)
The following are some key employment statutes in Ontario:
Overview of Canada’s Legal Framework for Employment
Matters
by John B.A. Wilkinson and Nicholas Caughey
1 (U.K) 30 & 31 Victoria , c. 3 2 R.S.C. 1985, c. L-2
3 R.S.C. 1985, c. H-6
4 R.S.C. 1985, c. C-8 5 S.C. 1996, c. 23
1. The Employment Standards Act, 20006 (“ESA”) provides for
minimum employment standards in Ontario, including minimum wages, work hours, overtime and holiday pay, vacation entitle-ments, sanctioned absence, termination, and severance pay. Employment standards established by the common law will apply where the ESA minimum standards are not expressly contracted into by the parties. Typically, the common law provides greater rights and benefits to employees. However, subject to some common law restrictions and subject to the following sentence, an employer and an employee may contractually agree to spe-cific employment terms. One cannot contract out of or below the ESA minimum standards.
2. Ontario’s Human Rights Code7 (the “Code”), like its federal
counterpart the Canadian Human Rights Act, is aimed at ensur-ing that all Ontarians are provided with equal rights and oppor-tunities without discrimination in the area of employment. The Code also establishes an adjudicative tribunal for human rights complaints.
3. The Workplace Safety and Insurance Act, 19978 provides
for a no-fault compensation plan to employees in respect of work-related illnesses and injuries. Certain employers collectively pay annual premiums for such workplace safety insurance, thus limiting their financial exposure to liability and costs of a work-place accident.
4. The Occupational Health and Safety Act9 imposes
respon-sibilities and duties on employers to address health and safety hazards on the job, including the recent addition of requiring employers to address workplace violence and harassment10 .
The Act provides for penalties consisting of fines, imprisonment, or both where it is contravened.
5. The Pay Equity Act11 requires employers with ten or more
employees to provide equal pay for work of equal value. 6. The Labour Relations Act, 199512 deals with the rights of
employees to form unions and participate in the collective bar-gaining process.
7. The Accessibility for Ontarians with Disabilities Act, 200513
requires certain employers to establish business practices, including training, with respect to the provision of services to individuals with disabilities.
COMMON LAW FRAMEWORK
The second overarching source of employment law is judge-made law, which establishes additional rights and remedies for employees.
The common law in Canada tends to be the sole authority for the following employment issues: (1) an employee’s duty to mitigate his or her damages; (2) the enforceability of non-com-petition and non-solicitation agreements; and, (3) constructive dismissal. Additionally, contractual terms of employment that are not strictly regulated by statute may be significantly dimin-ished in force, or even rendered void, by the common law.
6 S.O. 2000, c. 41. 7 R.S.O. 1990, c. P.7.
8 S.O. 1997, c. 16, Sched. A. 9 R.S.O. 1990, c. O.1.
10 Bill 168, An Act to Amend the Occupational Health and Safety Act with respect to violence and harassement in the workplace and other matters, 1st Sess., 49th Leg.,
Ontario, 2009 (assented to 15 December 2009), S.O. 2009, c. 23.
11 R.S.O. 1990, c.P.7. 12 S.O. 1995, c. l, Sched. A. 13 S.O. 2005, c. 11.
Employment Law in Canada | 3
Employment Agreements
by John D. Campbell
It is prudent for employers to have written employment agreements with their employees. In the absence of a writ-ten agreement, the employment relationship will be governed by the common law. Employment agreements can limit an employer’s costly common law severance exposure and can expand the employee’s obligations to the employer. Also, the certainty of a written agreement benefits both parties.
ENFORCEABILITY OF EMPLOYMENT AGREEMENT
An employment agreement must comply with the Employment Standards legislation of the applicable province. The parties cannot contract out of those standards. A term which contra-venes the minimum standards is void. The common law will apply in the absence of an enforceable written term.
The employment agreement must be provided to the prospec-tive employee before the commencement of employment. That enables the employee to obtain independent legal advice and avoids the risk that the employee may later claim he or she signed the agreement under duress or under unconscio-nable circumstances. Further, there must be consideration flowing to both parties for the employment agreement to be enforceable. New employment is consideration for an employ-ment agreeemploy-ment signed before the start of work; after the start of work, there is no additional consideration unless the employ-ment agreeemploy-ment is associated with a promotion or an increase in compensation.
ELEMENTS OF THE EMPLOYMENT AGREEMENT
The agreement will set out the employee’s title, responsibilities, salary, benefits and vacation. Other key terms that should be included:
Termination Without Cause
The agreement should clearly state the notice or severance the employee will receive. Sometimes the notice is limited to the Employment Standards minimum; sometimes the notice is based on a formula. At common law employees are usually entitled to substantially more notice than is set forth in the ap-plicable Employment Standards.
Termination for Cause
The agreement should indicate that the employee is entitled to
no notice or severance if he or she is terminated for cause. If “cause” includes a material breach of the employer’s policies or Codes of Conduct, that should be explicitly stated.
Resignation
The employee should have to give a specified period of resig-nation notice.
Bonus
At common law, an employee terminated without cause is entitled to a pro-rated bonus and to compensation for loss of bonus as part of a severance claim. Those entitlements can be displaced by clear wording in the employment agreement. The agreement should also explain the basis on which the bonus is calculated.
Employer’s Policies and Procedures/Policy Manuals
If the employment relationship is to be subject to the terms and conditions of the employer’s policies and procedures or policy manual, those items should be incorporated by refer-ence into the written employment agreement. Copies should be provided to the employee before signing the employment agreement.
Confidentiality
All employees have a common law duty to maintain the employer’s confidential information, and fiduciary employees have certain additional obligations. However it is desirable for employers to have new employees sign formal confidentiality covenants (perhaps as separate agreements) before starting work.
Non-competition
Generally, Canadian employees are free to compete with former employers so long as they do not take customer lists or trade secrets.
Senior employees have common law fiduciary duties that may include an obligation to not compete and not solicit customers or employees. The nature and scope of those fiduciary duties depend on the circumstances.
non-solicitation covenants as protection from competition from for-mer employees. These covenants must be carefully drafted as Canadian courts are reluctant to enforce them. The courts are very mindful of the power imbalance associated with covenants that are in restraint of trade and inhibit workers from earning a living. Any ambiguity will be construed against the employer and will likely render the covenant unenforceable.
The onus is on the employer to demonstrate that a non-com-petition covenant is the minimum necessary to protect both the parties’ interests and the public interest. A covenant to not solicit customers is more likely to be enforced.1
Canadian judges will not fix or rewrite overly broad non-com-petition covenants. If the covenant is ambiguous or overly broad the court will not “read down” the term so as to make it enforceable. The court will only use “blue pencil” severance sparingly, and only where the excised wording is clearly sever-able, trivial and not part of the main purpose of the restrictive covenant.
CONCLUSION
All employment relationships should be subject to a carefully drafted employment agreement. The absence of a written agreement results in uncertainty for both parties, and poten-tially costly results.
1Lyons v. Multari (2000), 50 O.R. (3d) 526 (C.A.); H. L. Staebler Co. v. Allan (2002), 296 D.L.R. (4th) 592 (Ont. C.A.); Shafron v. KRG Insurance Brokers (2009), 301 D.L.R.
Employment Law in Canada | 5
Termination of the Employment Relationship
by Carole McAfee Wallace
When terminating an employee in Canada, it is important to remember that the concept of “at-will” employment does not exist. Unless an employee acts in a manner that would consti-tute “just cause” for termination (which is a narrow category of behaviour), the employer is obligated to provide the employee with reasonable advance notice of termination. Alternatively, compensation can be paid to the employee in lieu of notice. Given that it is often practically undesirable to have an em-ployee continue to work after receiving notice of termination, which in many cases must be given months in advance to be considered “reasonable”, paying out the notice period is the more frequent choice.
NOTICE
The notice of termination provided to the employee must be specific and unequivocal. Moreover, it must be clearly commu-nicated to the employee.
The notice of termination must be provided in reasonable ad-vance of the actual termination. There is a statutory minimum period of notice that must be given, which varies according to length of employment. The legislation applicable to the em-ployee must be consulted, as there is various federal and pro-vincial legislation for unionized and non-unionized employees, each with applicable provisions. Employers cannot contract out of the statutory minimum. Legislation also may require that longer-serving employees receive severance pay, which is essentially additional payment in recognition of the employee’s contribution to the employer’s business.
However, the notice periods held to be reasonable in the com-mon law have traditionally been much longer than the statutory minimum. Unless the employment contract limits the notice period to the statutory minimum, or to another amount that is greater than the statutory minimum but less than the common law standard, the employer must provide compensation for the common law notice period.
In determining “reasonable notice” under the common law, the relevant factors include the length of service, age of employee, and the character of the position, including the degree of re-sponsibility and the employee’s level of training and education. Further, the length of notice considered to be “reasonable” notice may depend on the availability of similar employment, having regard to the experience, training and qualifications of the employee.
The employer has the choice of asking the employee to work through the notice period, or to pay compensation in lieu of no-tice. If pay in lieu of notice is given, the employer is to pay the wages to which the employee would be entitled as though the employee had worked through the notice period. The employer may also be required to continue medical and dental benefits to the employee for the duration of the notice period, and pay for unused vacation time.
JUST CAUSE
An employer is not required to give notice of termination if there is just cause for dismissal of the employee. “Just cause” refers to a situation in which the employee acts in a manner that is effectively a repudiation of the employment contract. Whether the employee’s conduct constitutes just cause de-pends on the particular context. Examples of behaviour that may amount to just cause include insubordination, insolence, culpable absenteeism, intoxication and sexual harassment. There is often confusion between the concepts of “just cause” and “wilful misconduct”, which may also lead to termination of employment. “Wilful misconduct” is a narrower category of behaviour than just cause. An employer must point to specific behaviour of the employee prior to dismissal, behind which must be a wilful or reckless disregard of the employer’s inter-ests on the part of the employee.
BAD FAITH
Employers should be conscious of their conduct in terminating employees, as an employee who sues for wrongful dismissal might also claim bad faith damages.
As the name indicates, bad faith damages might be claimed where the employer demonstrates bad faith in the manner in which it terminates the employee. Bad faith may be found where, for example, the employer is misleading, dishonest, or unduly insensitive in terminating the employee. The employee claiming such damages must prove that he or she suffered from mental distress as a result of the employer conduct about which the employee complains. Further, it must be shown that the mental distress was reasonably foreseeable by the parties. The requirement that the employee must prove injury that directly resulted from the employer’s conduct is a relatively recent development in the Canadian case law, established by the Supreme Court of Canada in Honda Canada Inc. v. Keays.1
Though it makes it more difficult for employees to succeed in such claims, employers should nonetheless be cognizant of the impact their behaviour may have on an employee they are dismissing and conduct themselves accordingly.
MITIGATION OF DAMAGES
The obligations surrounding a termination are not solely the employer’s. A dismissed employee has a duty to mitigate his or her damages by securing, or making reasonable efforts to secure, alternative employment. This might entail accepting a lesser position with same employer, commencing self-employment, or even relocating to obtain a suitable job in the employee’s particular field.
However, the duty to mitigate is held to a standard of rea-sonableness. An employee is not required to take a radically different job to meet his or her duty to mitigate. The employee is entitled to have some consideration for income level and for maintaining his or her position in a particular trade, profession or industry.
EMPLOYMENT CONTRACTS
An employer can control some of the uncertainties that might arise at the time of termination of an employee by clearly set-ting parameters in the original employment contract. While the employer cannot contract out of statutory minimums, such as minimum notice periods that must be provided on termina-tion, contracts can be used to limit or exclude the common law concepts that would otherwise apply.
For example, a contract can specify that certain acts will con-stitute just cause or wilful misconduct, effectively broadening the common law definitions of these concepts. The contract may also set out what period of notice will be given, how payment on termination will be structured, and how various types of incentive compensation will be dealt with on termina-tion. The employee’s duty to mitigate may also be outlined in the contract, or it may be expressly excluded if the parties so decide.
Carefully constructing an employment contract is therefore extremely important, yet employers often fail to give contracts due consideration. Obtaining advice before the employment relationship even begins, at the hiring stage when contracts are being drafted, can save considerable legal expenses and uncertainty down the line.
CONCLUSION
The law surrounding the termination of employees in Canada involves far greater consideration and obligation on the part of the employer than in jurisdictions that subscribe to “at-will” employment. Each situation will turn on its own set of facts. Further, there are numerous pieces of legislation in both the federal and the different provincial jurisdictions, each with its own minimum notice standards for the termination of an em-ployment relationship.
Employers must be alert to all the variables that can impact the extent of their obligations when terminating an employee. Where the situation is at all unclear, consulting legal counsel prior to termination can save time and expense in the long run.
Thanks to Mandy Seidenberg, Associate for her foundational work.
Employment Law in Canada | 7
Constructive Dismissal
by Sean G. Foran
It has long been the law that a unilateral substantial change to an employment contract or the introduction of a new employ-ment contract requires consideration, an acceptable form of which is the provision of working notice of the change. A failure to give such notice of a unilateral substantial change to the es-sential terms of an employment contract may amount to a con-structive dismissal. Examples of a substantial change include:
• demotion • pay reduction • forced transfer
• reduced workweek/compulsory leave of absence • layoff
A constructive dismissal may also arise where, even in the ab-sence of any unilateral fundamental change to the contract of employment, the employer’s treatment of the employee makes continued employment intolerable. There are situations in which the entire contract of employment is said to have been repudiated by the employer, either because of the employer’s own offensive conduct or because the employer has permitted or is deemed to have permitted a hostile or poisoned environ-ment to prevail insofar as the affected employee is concerned. In circumstances in which the workplace is so poisoned or hostile or in which the relationship of trust between employer and employee is so damaged by the employer’s conduct, the employee’s duty to mitigate would not entail having to remain in the workplace.
In Evans v. Teamsters Local Union No. 31 the Supreme Court
of Canada ruled that it was reasonable for an employee to be required to mitigate his losses by accepting re-employment, if offered by the dismissing employer, for the balance of any unexpired portion of the notice period. This decision puts an onus on employees to remain in their employment unless there are circumstances that would make it unreasonable to do so. While Evans involved a dismissal followed by an offer of re-employment for the remainder of the notice period, the court’s decision is of equal significance for the law of construc-tive dismissal, as it puts a construcconstruc-tively dismissed employee on notice that he or she should carefully consider whether a decision to cease working might deprive that employee of the substantial benefit of a claim, as such a decision might be
treated as a failure to mitigate.
THE LEADING CASE: FARBER v. ROYAL TRUST CO.
In the leading case on constructive dismissal, Farber v. Royal Trust Co.2, the Supreme Court of Canada established that in
unilaterally seeking to make substantial changes to the es-sential terms of the employment contract, an employer ceases to meet its obligations and is therefore terminating the con-tract. If the employee does not agree to the changes he or she is entitled to treat such action as a breach of contract and to leave his or her position. In cases of constructive dismissal, an employee is entitled to compensation in lieu of notice and in certain cases he or she may also be entitled to damages. To determine whether an employee has been constructively dismissed, the court must ascertain whether the unilateral changes imposed by the employer substantially alter the es-sential terms of the employee’s contract of employment. To make this determination, a judge will ask whether, at the time the offer was made, a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed. It is important to note that not all changes to the employment contract will constitute a substantial change. Employers can make any changes to an employee’s position that are allowed by the contract, including those changes that may be catego-rized as part of the employer’s managerial authority.
A CAUTION TO EMPLOYERS: WRONKO v. WESTERN INVENTORY SERVICE LTD.
The Ontario Court of Appeal in Wronko v. Western Inventory Service Ltd.3 determined that an employee was constructively
dismissed and entitled to damages despite the fact that he was provided with two years notice of the changes to the terms of his employment contract. This case serves as a warning to employers of the need to both provide notice of any substan-tial unilateral changes to the terms of employment and also to make clear to employees the consequence of a refusal of the new terms, i.e., of the employer’s intention to treat the notice as notice of termination in the event that the employee fails to accept continued employment on the modified terms.
1Evans v. Teamsters, [2008] 1 S.C.R. 661 2Farber v. Royal Trust Co, [1997] 1 S.C.R. 846 3Wronko, (2008), 292 D.L.R. (4th) 58 (Ont.C.A.) An application for leave to appeal to the Supreme Court of Canada was dismissed on June 26, 2008, see Western Inventory
When an employer seeks to unilaterally amend a fundamental term of a contract of employment, an employee has three op-tions. First, he may accept the change in the terms of employ-ment, in which case the employment will continue under the amended terms. Second, he may reject the change and sue for damages for constructive dismissal if the employer persists in treating the relationship as subject to the varied term. Third, the employee may make it clear that he is rejecting the new term. The employer may respond by terminating the employee with proper notice and offering re-employment on the new terms. If the employer does not take this course and permits the employee to continue to fulfill his job requirements, the employee is entitled to insist on adherence to the terms of the original contract. In these circumstances the employee will not have been held to condone or accept the change, however, compensation earned by the employee in continuing to fulfill his job requirements will be treated as mitigation and be de-ducted from any compensation awarded pursuant to the terms of the original contract.4
Employers need to be mindful to provide not only adequate notice of any fundamental changes to the terms of the employ-ment contract, but also to expressly notify employees of the consequence of a rejection of the change in terms.
While employers may be hesitant to state that an employee’s rejection of a change will lead to termination, Wronko neces-sitates that employers provide a clear explanation that the employee’s position will be terminated should he or she refuse to accept the new conditions and that such refusal would have the automatic effect of converting the notice of coming into effect of the amended contract into a working notice of termi-nation.5 Requiring an employee to signify whether he or she
accepts the change of terms is beneficial in that a failure to respond to the notice will not delay the running of time. Where an employee objects to the change in terms, it would be wise to provide the employee with a notice of termination effec-tive upon the expiry of the notice period along with an offer of re-employment based on the new terms of employment.
Thanks to Peter Biro for his foundational work.
4Russo v. Ken Bros. Limited, 2010 ONSC 6053 (Ont.S.C.)
5Alternatively, employers could implement a two-step process whereby, in the event of non-acceptance by the employee of the change, the employer could give working notice
Employment Law in Canada | 9
The Employee’s Duty to Mitigate: Working Notice and
Re-Employment
by Carole McAfee Wallace
It is well established that employees who are wrongfully dismissed, either without just cause or reasonable notice are required to seek alternative work in order to mitigate their losses. The question may arise as to whether an employee must, in mitigation of his or her losses, accept an offer of re-employment with the dismissing employer. Prior to the
Supreme Court of Canada decision Evans v. Teamsters
Lo-cal UnionNo. 31 (“Evans”) several appellate court decisions
suggested that returning to work for the dismissing employer post-termination would be rare.
The Court in Evans noted that “[a]ssuming there are no bar-riers to re-employment, requiring an employee to mitigate by taking temporary work with the dismissing employer is consis-tent with the notion that damages are meant to compensate for lack of notice, and not to penalize the employer for the dismissal itself.” This reasoning tilts the balance towards a more employer-friendly approach and reverses a longstand-ing subtle presumption that it was not generally reasonable to expect a terminated employee to mitigate by remaining in the workplace of the former employer.
MITIGATION IN THE CONSTRUCTIVE DISMISSAL CONTEXT
The issue of mitigation in the context of constructive dis-missal cases had been considered in appellate court deci-sions prior to the ruling in Evans. The Ontario Court of Appeal in Mifsud v. MacMillan Bathurst Inc.2, held that an employee
was obliged to accept a significant demotion as a means of mitigating damages. Prior to this decision the weight of authority was against requiring an employee to accept a lesser position with the same employer in order to mitigate damages.3
Evans marks the first time the Supreme Court of Canada has pronounced the law with respect to the duty to mitigate in constructive dismissal cases. There should be no distinction between constructive dismissal and wrongful dismissal as they are both characterized by employer-imposed termination of the employment contract.4
After Evans, constructively dismissed employees should con-tinue working under the new terms imposed by the employer while they search for another job unless they would suffer undue hardship as a result. This would certainly require em-ployees to reflect carefully on the implications of leaving their employment prior to finding new employment elsewhere in cir-cumstances where there is an alleged constructive dismissal.
Reasonableness Is Assessed Using an Objective Criteria
An objective standard is required in determining whether a reasonable person in the employee’s position would have accepted the employer’s offer of employment during a notice period. This is determined on a case-by-case basis. The key factor in determining whether the employee acted reasonably is whether the employee would be working in an atmosphere of hostility, embarrassment or humiliation.5 The onus is on the
employer to establish that the employee failed to act reason-ably by refusing the offer of re-employment.
No Difference Between Offers for Re-Employment and Working Notice
There is “little practical difference between informing an employee that his or her contract will be terminated in 12 months’ time (i.e. giving 12 months of working notice) and terminating the contract immediately but offering the em-ployee a new employment opportunity for a period of up to 12 months.”6 In either case, it is expected that the employee
is aware that the employment relationship is finite, and that he or she will be seeking alternative work during this notice period.7
A Heightened Duty to Mitigate if Employee is Dismissed Due to Corporate Reorganization
Employees who are terminated based on legitimate corporate reorganizations or the business needs of the company and then offered re-employment will more likely be required to mitigate by accepting an offer of re-employment than em-ployees who are terminated for some other reason.8 There is
1 [2008] 1 S.C.R. 661
2 (1989), 70 O.R. (2d) 701 (C.A.) [Mifsud] 3 See Jobber v. Addressograph Multigraph of Canada Ltd., [1980] O.J. No. 3033, aff’d. on this point at [1980] O.J. No. 1598, (C.A.) (Q.L.); O’Grady v. Insurance Corp. of B.C.
(1975), 63 D.L.R. (3d) 370 (B.C.S.C.) at 378; Duplessis v. Irving Pulp and Paper Ltd., [1983] N.B.J. No. 49 (C.A.)
4 Evans, supra note 1 at paras. 26-27 5Ibid. Bastarache J. at para. 30 6 Ibid. at para. 29
7 Evans, supra note 1 at para. 29
a presumption that a dismissal due to “legitimate” business concerns may be far less personal or acrimonious than when the dismissal relates more directly to the individuals them-selves.9
Thus, there would appear to be a more onerous burden on the employee to mitigate by accepting re-employment in situ-ations of corporate reorganizsitu-ations.
SOME PRACTICAL IMPLICATIONS OF EVANS
Employees
The employee has an obligation to mitigate following termina-tion by continuing or returning to work with the employer pro-vided there is no atmosphere of hostility, embarrassment or humiliation. This mitigation requirement applies to the extent that the employee would be entitled to reasonable notice. Further, employees are encouraged to work out the notice period with the employer.
Employers
Employers bear the onus of demonstrating both that an employee has failed to make reasonable efforts to find work and that work could have been found.10 If the employer
cannot meet its evidentiary burden, the employee is simply entitled to his or her full notice or pay in lieu. It is, therefore, important for employers to monitor the employee’s mitiga-tion efforts. Some steps that employers should take include: referring any job leads to the dismissed employee; confirming that the employee actually followed up on them and generally pursuing any leads suggesting that the employee may not be diligently searching for alternative work. As seen in Evans, employers can go one step further by offering re-employment. If the employee refuses (absent a hostile, poisoned or humili-ating work environment), courts may consider whether the employee failed to act reasonably in refusing to accept the offer of re-employment. While there is no positive obligation on an employer to assist employees in seeking other employ-ment, such measures would certainly enhance the employer’s ability to hold an employee to his or her strict mitigation obligations.
Employers are reminded of their duty to act in good faith in the manner of dismissing the employee and in their post-termination conduct. Should an employer decide to offer
re-employment after terminating an employee, this offer should be made in good faith and with the genuine purpose of assisting employees to mitigate their losses, with the effect of reducing the employer’s corresponding exposure to residual claims.
While employers are not obligated to provide work during the period of reasonable notice, “it is an accepted principle of employment law that employers are entitled (indeed encour-aged) to give employees working notice.”11 Offering working
notice instead of payment in lieu of notice is encouraged as a practical matter as the employer receives value (that is productivity) in consideration for the termination pay.
Thanks to Peter Biro for his foundational work.
9 Evans, supra note 1 at para. 31
10 Ibid. Bastarache J. at para. 30 citing Red Deer College v. Michaels, [1976] 2 S.C.R. 324 11 Ibid. Evans, supra note 1 at para. 29
Employment Law in Canada | 11 In Canada, temporary layoffs are common in unionized
work-places and are explicitly dealt with in most collective agree-ments. Such layoffs, however, are far less common in non-unionized settings.
One reason for this is that temporary layoffs are usually not ad-dressed in employment contracts. More importantly, however, employers have no general entitlement to temporarily lay off employees at common law, despite express provincial statutory authority to the contrary.
It is noteworthy that although provincial statutes may expressly provide for temporary layoffs without the need to specify a recall date in the non-unionized setting, such actions may be treated as constructive dismissal at common law. In light of this potential consequence, employers should consider alterna-tive measures during an economic decline or where there is truly a shortage of work, including: (1) scaling back on hours of work; (2) job-sharing; (3) outright terminations; and (4) volun-tary unpaid leaves of absence.
In the case of voluntary unpaid leaves of absence, employ-ers can exert some control over this measure by reserving the right to deny a leave if the departure of a particular employee is not operationally feasible for the organization. An employer may also specify the minimum and maximum lengths of such a leave period and the benefits coverage that would continue during the leave period.
Should employers nevertheless believe that it would be worth-while to temporarily lay off employees, such action should ide-ally be consistent with their employment contracts and written policies dealing with such layoffs, if any.
The common law will generally infer the right to temporarily lay off non-unionized employees in the absence of express terms under an employment contract in circumstances where:
(a) the employer has a history of temporary layoffs for various reasons, including a shortage of work;
(b) the employer is in an industry where temporary layoffs or breaks in service are common;
(c) the employer has a policy in place to warn employees that temporary layoffs are possible when there is a downturn in business or shortage of work; and
(d) the employer continues to provide benefits to laid off employees during the layoff term.
Canadian employers should therefore advise their employees (including those who remain) why downsizing is necessary at the earliest stage possible. Canadian employers should also be frank about their financial position with their employees. Generally, Canadian employers should not temporarily lay off non-unionized employees in the absence of an express term to this effect in an employment contract, or in the absence of a combination of the factors noted above.
Before temporary layoffs are initiated, and before unpaid leave of absence policies are crafted, be sure to consult with legal counsel to ensure that these measures will assist in achieving cost reduction goals without exposure to employment-related liability risks.
Thanks to Daniela Corapi, Student-At-Law for her assistance.
Temporary Layoffs in a Non-Unionized Setting
All employees have certain basic obligations to their former employer. Senior and key employees have additional fiduciary obligations to their former employer.
WHICH EMPLOYEES ARE CONSIDERED FIDUCIARIES?
Typically, fiduciary obligations are owed by top management and senior employees. Recently, these obligations have also been extended to the employer’s “key personnel”. The concept of “key personnel” focuses on the role the employee plays in the enterprise, not nature of the position.
Some of the factors that the courts have considered are: (a) the employee’s ability to exercise discretionary power; (b) the authority delegated to the employee to affect the
employer’s legal and economic interests;
(c) the degree of trust placed in the employee; and (d) the extent to which the employment relationship
renders the employer vulnerable to the employee.
WHAT OBLIGATIONS DO EMPLOYEES OWE THEIR FORMER EMPLOYER?
Fidelity
All employees owe their employer basic duties of fidelity, loyalty and good faith. These duties are reflected in specific obligations, some of which survive the end of the employment relationship.
Competition
Non-fiduciary employees are free to compete with their former employer as long as they do not take customer lists or trade secrets.
Fiduciary employees owe an obligation to not compete unfairly against their former employers. This includes the obligation to not directly solicit their former employer’s customers, clients, suppliers and employees.
It is considered unfair competition for a fiduciary to take advan-tage of a former employer’s business opportunity, even if the
former employer is not in a position to take advantage of the opportunity. In this context, the corporate opportunity must not be readily available to the employer’s competitors. A fiduciary’s duty not to compete unfairly continues for a reasonable period of time after termination of the employment. The court weighs several factors to set the reasonable period of time. Usually the period does not exceed one year.
Fiduciary employees are usually permitted to advertise as long as the advertisement is not targeted at their former employer’s customers, clients and suppliers. Accordingly, a generic and industry-wide solicitation is usually not considered unfair com-petition.
Subject to the foregoing restrictions, fiduciaries are usually free to accept the business from their former employer’s customers, clients and suppliers.
Duty of Confidentiality
All employees have a duty to refrain from disclosing or improp-erly using confidential information that belongs to a former employer. This duty is not limited to written or electronic documents – it includes confidential information acquired and retained in the employee’s memory.
The employer does not need to label the information as confi-dential. The information will be considered confidential if in the circumstances an obligation of confidence should be implied. An employee must maintain the confidentiality of his or her former employer’s customer lists or trade secrets, and cannot use that information to compete with the former employer. The general knowledge and skill that an employee develops from work experience is not considered confidential informa-tion.
The obligation to maintain confidentiality lasts as long as the information stays confidential.
Duty to Give Reasonable Notice of Resignation
All employees have an obligation to provide their employer with reasonable notice of resignation. The length of the notice de-pends on several factors including (a) the length of service; (b)
Obligations of Departing Employees
Employment Law in Canada | 13 the character of the employment; (c) the employee’s age; and
(d) the availability of similar employment.
For most non-fiduciary employees the required notice period would be approximately two weeks. Fiduciary employees must give more notice depending on the circumstances.
THE DECISION IN RBC v. MERRILL LYNCH
Recently the Supreme Court of Canada ordered the former branch manager of an investment firm (RBC) to pay $1.48 mil-lion in damages for breach of his obligation of good faith owed to RBC. He joined Merrill Lynch and assisted Merrill Lynch in recruiting RBC employees. The manager was not a fiduciary at RBC. However, the court found that as a senior employee he owed a duty of good faith to his former employer, and that duty included an obligation to retain RBC employees.
The decision appears to have created a new category of quasi-fiduciary employee that owes some but not all the duties of a true fiduciary. Clearly the law is still developing in this area.
WHAT SHOULD EMPLOYERS DO?
Prudent employers insist that their employees sign agreements to deal with these issues. Wherever possible, the agreement should be signed before the employee starts work. In particu-lar:
(a) The employment contracts of senior or key employees should set forth their fiduciary obligations.
(b) All employees should sign stand alone confidentiality
and trade secrets agreements.
(c) All employment contracts should specify the amount
of resignation notice.
(d) Sales and senior employees should sign stand alone
non-competition or non-solicitation agreements.
These agreements are inherently vulnerable to attack
as being ambiguous or overbroad. Therefore it is
important that these agreements be drafted with care,
and they should focus on the most important
concerns. Paradoxically the broadest agreements of
fer the least protection, as they clearly will
not be enforced.
Progressive Discipline
by Stephanie L. Turnham
In Ontario, the one circumstance in which an employer is justi-fied in terminating an employee without providing reasonable notice or pay in lieu of notice is where the employer has just cause to terminate. The meaning of just cause is fluid and depends on many situational factors. Where the conduct is severe, the employer may have a case for immediate, summary dismissal. However, where the conduct is minor or moderate but capable of correction, then the employer may have a duty to engage in progressive discipline before terminating the em-ployee. However, progressive discipline can be a double-edged sword because employers may also wish to engage in progres-sive discipline to correct misconduct or improve an employee’s performance, but this step can sometimes have legal ramifica-tions for the employer.
This article applies to the non-unionized workplace; employees in a unionized workplace are governed by their collective agree-ment and the relevant labour relations legislation.
WHAT IS PROGRESSIVE DISCIPLINE?
Progressive discipline is a process to evaluate and address employee misconduct or performance deficiencies. It involves incrementally more serious warnings and other action, such as suspensions, prior to dismissal of an employee, to make the employee aware of unacceptable conduct and thereby encour-age the correction of his or her performance.
WHAT ARE THE OBJECTIVES OF PROGRESSIVE DISCIPLINE?
Not To Punish, But To Provide an Opportunity To Correct Mis-conduct/Improve Performance
The goal of progressive discipline is behaviour modification. Early warnings are intended to bring the issues to the attention of the employee so that they can be corrected, and gradu-ally more serious warnings and suspensions are to drive the issues home for the employee. The idea is not to punish the employee but to correct the behaviour. There are obvious cost savings because the alternative would be to hire and train a replacement.
Can Support a Case for Just Cause Dismissal if Misconduct Continues
The use of progressive discipline can provide an employer with the necessary paper trail to support a case of just cause dismissal. It illustrates that the employer did not condone the behaviour. It may also minimize an employer’s risk of facing
a claim of discrimination. A termination for cause should not take an employee by surprise, and employees should not be left guessing as to the cause for termination. However, some acts of misconduct may be so serious as to justify immediate dismissal, such as theft, fraud or a risk to health and safety of individuals.
To Deter Other Employees
Other employees who witness discipline being enforced on a fellow employee may also modify their own behaviour accord-ingly. Progressive discipline can therefore be a form of deter-rence.
Common Steps in Progressive Discipline
A progressive discipline policy typically contains the following progressive steps: (1) an informal discussion and verbal warn-ing; (2) a written warnwarn-ing; and (3) suspension.
It is essential for the employer to keep a written record of all disciplinary steps, including notes of any verbal warnings and copies of any written warnings. A suspension should be ac-companied by a written notification of the job expectations and future consequences if not met. At each stage, an employee should also be given an opportunity to respond, and should be given a reasonable time to improve their performance.
Proportionality and the Contextual Approach
The Supreme Court of Canada has adopted a “contextual” approach to the analysis of whether discipline or termination is justified. Where an employee is dismissed for cause, the court must determine whether the nature and degree of the dishon-esty warranted dismissal in the context of the entire employ-ment relationship. Similarly, sanctions short of discharge may be appropriate for conduct that falls short of establishing just cause, if they are proportional to the misconduct.
If the steps taken by the employer by way of progressive disci-pline are disproportional to the misconduct, there is a danger that a court may find the employee to have been constructively dismissed.
WHEN IS PROGRESSIVE DISCIPLINE NOT CONSIDERED CONSTRUCTIVE DISMISSAL?
When There Is an Implied Term in the Employment Contract Permitting Reasonable Discipline
Employment Law in Canada | 15 implied in an employment contract in certain situations, either
through custom and usage, in accordance with the intentions of the parties or as a matter of law.
When There Is Express Agreement To Discipline
In addition, there may be express agreement on progressive discipline. Where an employer has created a company policy that expressly provides that failure to comply may result in disciplinary action and/or dismissal, and the employees have reviewed and signed the policy, then an employee who contra-venes that policy should expect to be subject to discipline. Note the other side to this equation: if there is a progressive discipline policy in place, then employers ought to follow it. Where a progressive discipline policy is not followed before ter-mination of an employee, there is a risk that the court will find that the employee has been wrongfully dismissed.
When There Is Just Cause and the Employer Disciplines Instead
An employer who has just cause for termination, but instead chooses to discipline the employee, should not be found liable for constructive dismissal. However, when imposing discipline, an employer must act in a reasonable and non-discriminatory manner. There must be a reasonable amount of time for the discipline to have an effect on the employee’s conduct. In ad-dition, the application of discipline must not be inconsistent or unevenhanded.
CONCLUSION
Employers ought to be particularly wary of any circumstance in which they believe they have just cause to terminate an employee. Termination is the most severe sanction that an employee can suffer. If the termination occurs without any warning the employer may be faced with a claim of wrongful dismissal. Progressive discipline policies that provide a reason-able opportunity for the employee to correct his or her miscon-duct or improve performance will not only assist an employee, but will also assist the employer in providing a clear paper trail of the efforts taken prior to the severe step of dismissal and can support a claim for just cause. However, employers engaging in progressive discipline face the risk of a claim for constructive dismissal. In order to protect against this risk, employers are well advised to craft and distribute to employees a clear policy allowing for reasonable progressive discipline.
Human Rights Regimes in Canada and the Provinces
by Raj Anand and Jessica Eisen
There are currently three key means of protecting human rights in Canada: the Canadian Charter of Rights and Freedoms1,
the Canadian Human Rights Act2, and provincial and territorial
human rights legislation. These laws apply in many different contexts including the workplace and it is therefore important for all employers to be familiar with, and to protect the rights guaranteed by these laws.
CANADIAN CHARTER OF HUMAN RIGHTS AND FREEDOMS
The Canadian Charter of Rights and Freedoms (“Charter”) is a bill of rights which forms the first part of the Constitution Act, 1982. It applies to all government laws and activities includ-ing the laws and actions of federal, provincial, and municipal governments. It does not apply to private activity.
The Charter guarantees certain fundamental freedoms for ev-eryone, including freedom of conscience and religion; freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication; freedom of peaceful assembly; and freedom of association. It also guar-antees certain legal and equality rights for everyone including, among other things, the right to life, liberty and security of the person; the right to be secure against unreasonable search or seizure; the right not to be subjected to any cruel and unusual treatment or punishment; and the right to equal protection and equal benefit of the law without discrimination and, in particu-lar, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disabil-ity. Unlike other rights protected by the Charter, mobility and democratic rights are only guaranteed for citizens.
CANADIAN HUMAN RIGHTS ACT
The Canadian Human Rights Act is a federal statute that ap-plies to people who receive goods and services from or are em-ployed by either the federal government or a private company regulated by the federal government. For example, all federal Crown corporations (i.e. Canada Post Corporation or the Bank of Canada) are required to adhere to the Canadian Human Rights Act, as are private companies such as railroads, airlines, banks, telephone companies, and radio or TV stations.
The Canadian Human Rights Act is similar to its provincial counterparts in that it lists prohibited grounds of discrimination including: race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability and conviction for which a pardon has been granted. In the case of British Columbia (Public Service Employee Relations Commission) v. British Columbia Government Service Employ-ees’ Union3, the Supreme Court of Canada defined a three-part
test used to determine if a violation of the Canadian Human Rights Act can be justified as a bona fide occupational require-ment (“BFOR”). Before the Supreme Court decision in Meiorin, human rights violations were treated as either “direct dis-crimination” pursuant to the analysis in Ontario Human Rights Commission v. Borough of Etobicoke4, or as ‘adverse effects
discrimination’ pursuant to the analysis in O’Malley v. Simpson-Sears.5
The three-part Meiorin test, which must be established on a balance of probabilities, provides that first, the employer must show that it adopted the standard for a purpose rationally connected to the performance of the job. Second, the em-ployer must establish that it adopted the particular standard in an honest and good faith belief that it was necessary to the fulfilment of that legitimate work-related purpose. Third, the employer must establish that the standard is reasonably nec-essary to the accomplishment of that legitimate work-related purpose. To show that the standard is reasonably necessary, it must be demonstrated that it is impossible to accommodate individual employees sharing the characteristics of the claimant without imposing undue hardship upon the employer.
The process of dealing with human rights under the Canadian Human Rights Act or its provincial counterpart is very different from dealing with employment actions in the civil context. For
example, complaints under the Canadian Human Rights Act
are first investigated by the Canadian Human Rights Commis-sion and, if the CommisCommis-sion refers the complaint on, it will be decided by the Canadian Human Rights Tribunal. At the federal level, as well as in most provinces, the Commission acts like a sort of gatekeeper, investigating complaints and determining if further inquiry is warranted. If the Commission determines that
1 Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11 2 Canadian Human Rights Act, R.S.C. 1985, c. H-6
3 British Columbia (Public Service Employee Relations Commission) v. British Columbia Government Service Employees’ Union, [1999] 3 S,C,R 3 (“Meiorin”) 4Ontario Human Rights Commission v. Borough of Etobicoke, [1982] 1 S.C.R. 202
Employment Law in Canada | 17 further inquiry is not necessary, the complaint will not proceed
to adjudication. If, however, the Commission determines that further inquiry is necessary, and if a resolution between the parties cannot be reached, the Commission will refer the case to the Tribunal for a formal hearing.
At the adjudication stage, each Tribunal has its own rules of practice and procedure, and may decide all questions of law or fact necessary to determining the matter. If a complaint is substantiated, the Tribunal has the power to order that the employer make available to the complainant all of the rights, opportunities or privileges that were denied him or her as a re-sult of the discriminatory practice. In addition, the Tribunal can order that the employer compensate the complainant for any or all of the wages that the complainant was deprived of as well as for any expenses incurred by the complainant as a result of the discriminatory practice.
PROVINCIAL HUMAN RIGHTS
Each province and territory has its own human rights legisla-tion, usually called a code or an act (or in Quebec, a charter). This legislation covers those kinds of organizations not covered by federal legislation such as provincial governments, as well as private entities.
Most provincial human rights legislation prohibits discrimination in the provision of goods, services, accommodation, facilities, tenancy, professional regulatory organizations and employ-ment. Though the grounds of discrimination vary slightly by province, generally they include race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, family status and disability.
Most provincial human rights regimes are similar to the federal regime under the Canadian Human Rights Act in that a Com-mission will first investigate and mediate a complaint before determining whether a further inquiry by a Tribunal (or in the case of Saskatchewan, the Court of Queen’s Bench) is neces-sary. In Quebec, individuals whose complaints are not referred to the Tribunal may nonetheless choose to pursue remedies before the Tribunal. While the Commission in Quebec bears the cost of presenting referred cases to the Tribunal, however, individuals proceeding without referral by the Commission must do so at their own expense.
In Ontario, British Columbia, and the territory of Nunavut, the Tribunal and not the Commission is responsible for accepting, screening, and mediating human rights complaints, in
addi-tion to adjudicating them. British Columbia and Nunavut do not even have Commissions and in Ontario, the Commission’s role is focused on research, policy development and education. Another important part of the Ontario human rights system is the Human Rights Legal Support Centre which provides a range of publicly funded legal services to applicants including repre-sentation before the Tribunal.
HUMAN RIGHTS IN THE WORKPLACE
Some of the main human rights issues which arise in the work-place include discrimination on enumerated grounds in hiring and in accommodation of employees. For example, every em-ployer has a duty to accommodate when an employee requires an adjustment to his or her work environment or terms of employment in order to accommodate a need arising from an enumerated ground such as disability, family status or religion. When the duty arises, employers must make every reasonable effort to accommodate the employee up to the point of undue hardship.
The human rights regime in Canada and the provinces is a broad system informed by legislation and common law that seeks to ensure equal treatment for all individuals both in the workplace and outside of it. It is something that all employers need to be familiar with and proactive in protecting.
Duty to Accommodate – The Undue Hardship Threshold and
the Workplace
by Mark Edelstein
The Duty to Accommodate—Striking a Balance Between Employer Needs and the Obligation to Accommodate.
An employer’s duty to accommodate the legitimate needs of employees from a human rights standpoint – whether based on religious belief, illness, disability or some other factor – has long been established. What’s been difficult to establish is the extent to which employers must go to accommodate these needs. Employers often are under the impression that they need to demonstrate that it is virtually impossible to accommo-date the employee in order to establish that accommodation would result in undue hardship for the employer, thereby reliev-ing the employer of the accommodation requirement.
Over the last several years the Supreme Court has shifted towards a more balanced approach. In Hydro-Quebec v. Syndicate des Employees de Techniques Professionelles st de Bureau d’Hydro-Quebec1 the court infused the undue hardship
test with a renewed reasonableness standard. The case (this one out of Québec) is the latest example of a string of Court of Appeal and Supreme Court of Canada decisions – Mulvihill v. Ottawa2, Honda v. Keays3, and Evans v. Teamsters4 – that
reflect an unmistakable shift in judicial attitude towards a more practical and reasonable approach to the interpretation and application of the undue hardship threshold.
DUTY TO ACCOMMODATE BASED ON ILLNESS
In the Hydro-Québec case, the complainant employee had an employment history marked with many physical and mental health problems. These problems resulted in extensive ab-sences from work. In the final seven and one-half years of her employment, she had missed 960 days of work.
The employer had adjusted the employee’s working conditions on several occasions in an attempt to accommodate her limita-tions. These included actions ranging from assigning lighter duties to providing a gradual return to work following a depres-sive episode. None of the actions improved the complain-ant’s ability to report to work regularly and she was eventually dismissed.
At the time of her dismissal, the complainant had been absent from work for over five months, the employer had obtained a psychiatric assessment that confirmed that the employee
would not be able to work regularly without extended absences, and the complainant’s own doctor had recommended that she stop working for an indefinite period.
The employee grieved the dismissal. Her grievance was dismissed by both the arbitrator and by the Québec Superior Court on appeal. The union appealed again to the Québec Court of Appeal and won its case, with the Court of Appeal stating that the employer had to prove that it was impossible to accommodate the complainant.
MORE MODERATE STANDARD EMERGES
The Supreme Court of Canada disagreed with the Court of Appeal’s approach and allowed the employer’s appeal. In a unanimous decision, Justice Deschamps stated that:
“What is really required is not proof that it is impossible to integrate an employee who does not meet a standard, but proof of undue hardship, which can take as many forms as there are circumstances.”
Justice Deschamps went on to state that:
“ … the goal of accommodation is to ensure that an employee who is able to work can do so. In practice, this means that the employer must accommodate the employee in a way that, while not causing the employer undue hard-ship, will ensure that the employee can work. The purpose of the duty to accommodate is to ensure that persons who are otherwise fit for work are not unfairly excluded where working conditions can be adjusted without undue hard-ship.”
“However, the purpose of the duty to accommodate is not to completely alter the essence of the contract of employment, that is, the employee’s duty to perform work in exchange for remuneration.”
The Court found that if an employee’s condition hampers busi-ness operations or prevents an employee from working in the foreseeable future – even though the employer has tried to ac-commodate them – the employer will have satisfied the undue hardship test and the dismissal will be non-discriminatory.
1Hydro-Quebec, [2008] 2 S.C.R. 561
2Mulvihill v. Ottawa, 90 O.R. (3d) 285 (Ont. C.A.) 3Honda v Keays, [2008] 2 S.C.R. 362
Employment Law in Canada | 19 ASSESS THE FACTS ON A CASE-BY-CASE BASIS
The Supreme Court of Canada’s acknowledgement that proof of undue hardship can take as many forms as there are cir-cumstances reaffirms that each case must be judged on its own merits – with the standard for proving undue hardship now far short of proving that accommodation is impossible. Recent decisions have reiterated the importance of context. Where providing accommodation would, for instance, result in safety risks that a reasonable employer could not accept, a refusal to
accommodate meets the undue hardship threshold.5
For these reasons, consultations between your organization’s human resources professionals and internal or external coun-sel can be invaluable in helping you assess the limits of any accommodation requirements, if and when such a situation arises.
